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Blockchain: Some remarkable announcements part I
| 29-08-2016 | Carlo de Meijer |
R3 and Corda patent
R3CEV, the bank-backed consortium this week announced that it had filed for a patent of Corda, the distributed ledger software that underlies its new project ‘Concord’.
Some critics have argued that blockchain-based solutions should not have patents attached. That could not only hinder innovation in the field of distributed ledgers technology over the coming years. But it could also stand in the way of a more massive adoption of this technology.
R3, however sees it different and says that “although Concord will resemble other platforms working on blockchain technology the underlying software Corda has/offers enough unique features to justify a patent”. “Corda is just one element of the wider Condor platform”.
Corda White Paper
In the meantime R3 also released its first Whitepaper on Corda. It gives an introductory, non-technical overview that explain its vision, some design choices and outlines the key concepts underpinning the Condor platform.
The Corda project that was announced in April this year, aims to create the software that would be central to its wider blockchain-inspired shared ledger development project, called Condor.
In this Whitepaper it is explained how R3 set themselves the challenge of starting with the various pain points in the financial industry’s: duplicated, inconsistent data and business logic and redundant business processes – and asked themselves “if they could apply breakthroughs in distributed ledger and blockchain technology to solve them”.
Corda is in fact the outcome of the analysis R3 and the participating banks made on how to achieve as many of the benefits of distributed ledger and blockchain technology as possible “but in a way that is sympathic to and addresses the needs of regulated financial institutions”.
What is Concord?
Concord is aimed to become a distributed ledger platform that has been in development for over a year now. Thereby various challenges are assessed such as governance, internal record keeping and regulatory reporting across the financial services marketplace.
R3 describes Concord as a ‘shared-services model’ that still maintains privacy for banks. Concord aims to become a universal software platform connecting bank operations, allowing companies to run high-scale financial applications on permissioned networks across organisations and internally.
This platform that will be designed to record and manage important, financial agreements (read: smart contracts) between regulated financial institutions, aims to digitalise so-called back and mid-office functions, including trade clearing and settling securities trades, asset registry, reconciliation, and even the recording of cash balances.
By moving these middle and back office functions to a secure cloud-based ledger, R3 en its members hope that Concord will significantly streamline present cumbersome operations, and lower the costs of maintain them. By doing that huge cost savings could be realised (billions of dollars).
Traject
A version of Concord is expected to be launched in the next several months. A small number of member banks will begin testing the system early 2017, with an so-called “alpha” version planned to appear by the middle of next year. “We need to make this real to business users in 2017”, according to R3.
It however will be up to consortium members to decide whether to use it or not. Current bank members of the consortium haven’t (yet) committed to using the new Concord platform and aren’t bound to use it. Nevertheless they have invested money and resources helping build it and also have input into Concord’s specifications.
Concord versus Ethereum
Concord resembles Ethereum, another distributed ledger platform, in a number of ways. Just like Ethereum Concord is viewed as a platform that will allow developers to build any variety of applications. But Concord is tailored expressly for financial institutions, and so has different features and functions.
Perhaps the most important difference between Concord and Ethereum is the way transactions will be recorded. With Ethereum every transactions is recorded, verified and disclosed immediately in their respective public, distributed ledgers.
With Concord, while the transaction is verified via a distributed ledger, it is not publicly disclosed, maintaining the confidentiality that was a key concern of R3’s member banks. The details are shared only by the parties involved, or parties to whom they give access.
Carlo de Meijer
Economist and researcher
Why companies still use Excel
| 25-08-2016 | Lionel Pavey |
Do you still rely on spreadsheets in your daily treasury operations? We have read multiple articles on this subject lately and we decided to ask our community: Why do treasurers still rely on spreadsheets? Yesterday Jan Meulendijks gave us his opinion on the topic. Today expert Lionel Pavey talks about the benefits of using Excel in your company.
Why do companies use Excel?
Cost – it is part of the Microsoft Office Package; low maintenance costs
Use – everyone has some level of proficiency with Excel
Versatile – data can be customized to your own requirements
Simplicity – comes preloaded with over 400 different formulae, though far less than 100 are truly needed for Treasury purposes
Training – most people learn on the job, no need for expensive courses to help people use the software
Flexible – give the same data to different people and see how they uniquely extract the data they need to answer their queries
Compatibility – all relevant data that is present on standalone accounting software etc. can be exported into Excel and adjusted for individual purposes to achieve the desired results
Problems with Excel?
Ignorance – getting staff to comprehend the route from input to output
Errors – not incorporating checks and balances that can highlight discrepancies
Individualism – is the output only for your consumption or is it passed on down through the chain, enhanced and then passed on again?
Disarray – everyone applies different fonts, layouts, conditional formatting. Should be a company policy in place to determine how data is collated and presented
Uncertainty – why do people insist on hiding columns and rows?
Duplication – the same spreadsheet data is present on many PC’s at the same time with subtle but significant differences. Someone has to own the original document
Solutions?
Dedicated BI software – expensive, no value outside of the present company normally, requires regular maintenance, multiple departments have to sign off before it can even be implemented, constant reviews of whether the correct modules are present, system updates
Design Structure – implement a company policy clearly dictating how “shared” spreadsheets are to be designed.
Input Structure – agree who delivers what, to whom, when and in the agreed format
Share results – allow other people to see how their data has been incorporated into the final reports so they can appreciate the significance of their contribution
Ownership – define who owns what part of the process (their level of responsibility) and who owns the spreadsheet
Reports – ensure that the end users clearly define what they require at the start. 10 versions of a spreadsheet before they get what they wanted means they did not know what they wanted or did not communicate clearly
Conclusion
Excel is well known, robust, versatile and understood. For cash flow forecasting 4 or 5 secure “master” spreadsheets can allow for most situations – daily cash flow recording, future cash flow forecasting, agreed budget, capital expenditure plans, funding commitments. These have to be well protected and isolated on the hard drive. Everything is a trade off – nothing will give you 100 per cent accuracy. However, if you can relatively simply design the required spreadsheets then data is always up to date and available when needed. This covers the 80 per cent of the time maxim– the other 20 per cent you will have to work harder to achieve. Excel is not going away – every new versions even more functionality that allows us to achieve the required level of input more easily whilst ensuring that the output can be better analysed and interpreted.
Lionel Pavey
Cash Management and Treasury Specialist